…from this?
I’m not trying to get rich quick, but I’d love to offset the increasing cost of my 75-mile daily commute.
The most straightforward way would just be to buy a bunch of gasoline now, and then sell it after the price goes up. Buy cheap, sell dear.
But of course, in this modern society, you don’t even need to pour the gasoline into big tanks you own. You could just buy futures on the commodities market.
What, you mean I can’t be like Homer Simpson and just keep all of the gas in my backyard? “First you get the gasoline…then you get the money…then you get the power…then you get the women!”
The gang on Always Sunny tried this. Who are you going to sell it to? And where? Gasoline stands don’t work as well as lemonade stands. And you can’t count a liquid.
Buying futures to profit from a rise in the price of gasoline will only work if the price of gasoline goes up more than the market expects it to (roughly speaking there should be a risk premium as well). The futures price already incorporates market expectations.
This is the kind of answer I was looking for. I kind of figured “buy futures” was too easy, or everyone would do it every spring. Seems like gas goes up every year around the beginning of summer.
So, is there any way I can profit from this, or is a middle-class guy like me better off leaving well enough alone? What about oil company stocks? Is there a graph somewhere that shows what happens when summer comes and/or when there is sabre-rattling over Iran? Because I think those are going to happen around the same time in a few months.
Gas or crude oil?
Gas is known as rbob to investors (Reformulated Blendstock for Oxygenate Blending) and is much harder to trade than crude oil. They don’t have a consistent relationship. Refining costs vary so don’t pay for their unknown variance.
You probably want crude oil. Its simple to buy crude oil futures in the form of an EFT today.
The most popular one is USO (the symbol). Its not that exiting though - I last owned it during the peak of 2008 when crude hit $147/bbl.
The dollar also moves crude prices. A strong dollar moves crude down. Despite the Becks of the world’s nonsense on the subject the dollar has been gaining strength since early 2008.
Then again, though, the current price also incorporates market expectations, at least to some degree.
Could the OP’s question involve more action than mere investment? If you can figure out a way to spark a shooting war between Iran and the US and/or Israel, one that includes the temporary closing of the Straits of Hormuz, then oil prices will skyrocket, making the futures market a safer bet.
At a guess, this would entail some kind of criminal action on your part, so I don’t particularly endorse it. On the plus side, perhaps you can figure a way to make it a crime against Iran rather than against the US or Israel, and therefor make punishment far less likely.